2006.03.20 EDA Packet - Laserfiche WebLink

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The borrower(s) is required to sign a Note and Mortgage (see Exhibits D and E) in order to receive down payment assistance. Down payment assistance will be provided in the form of an interest-free loan secured with a Second Mortgage and payable upon sale or transfer of property. The Second Mortgage is not assumable. Full repayment of the principal is due upon the sale, maturity, or other transfer of the property or when the buyer no longer occupies the property as the principal residence. Washington County will subordinate the second mortgage only when the property is being refinanced to secure a lower rate and/or term and no cash is refunded to borrower(s). FIRST MORTGAGE REQUIREMENTS • The first mortgage will be fixed term, fully amortizing, over a minimum term of twenty (20) years. No rollover, adjustable rate mortgages, or other mortgage loans with principal balloons will be permitted. • The loan to value ratio may be at least 105 percent(105%), including the Washington County FirstHOME Program loan. • The loan must meet industry accepted underwriting standards. • The interest rate in the first mortgage may be no higher than the current market rate in suburban Washington County communities. THIRD MORTGAGE REQUIREMENTS— Minnesota Housing Finance Agency Entry Cost Homeownership Program(ECHO). • Entry cost assistance (for the down payment and closing costs) is available through the Minnesota Housing Finance Agency ECHO Program in an amount up to $3000 for existing homes and $4,000 for new construction. ECHO loans are interest free, third mortgages due upon sale, maturity, or when the buyer no longer occupies the property. • MHFA third mortgages are discounted 26 percent (26%) at loan purchase. Lenders may pay the entire discount or may be reimbursed in part through resources other than from the homebuyer or property seller. • Other eligibility requirements established by the ECHO Program will apply when used in conjunction with the Washington County FirstHOME Program. For example, ECHO participants may not retain more than $5,000 in liquid assets upon closing, not including funds invested in tax sheltered retirement programs. DOWNPAYMENT ASSISTANCE PROCEDURES 1. Borrowers wishing to participate in the FirstHOME down payment assistance program must express their interest to the participating lender with whom they are working. The FirstHOME Administrator(Ramsey County) will work with participating lenders,not directly with homebuyers. The lender will complete a worksheet (see Exhibit A) to determine the amount of down payment assistance for which the borrower qualifies. The lender will then forward the worksheet to the HRA where it will be reviewed for accuracy and eligibility. An authorized HRA staff member will sign 35